Exhibit 10.1
ENVIRONMENTAL TECTONICS CORPORATION
STOCK OPTION AGREEMENT
This Stock Option Agreement (this "Agreement") is made effective as of
______________ (the "Effective Date"), by and between Environmental Tectonics
Corporation, a Pennsylvania corporation (the "Company"), and _________________
("Grantee").
RECITALS
WHEREAS, the Company has adopted the Environmental Tectonics
Corporation 2005 Stock Option Incentive Plan (the "Plan"), and the Plan is
subject to shareholder approval.
WHEREAS, for the purpose of encouraging and rewarding Grantee's
contributions to the performance of the Company and aligning Grantee's interests
with the interests of the Company's stockholders, the Company has agreed to
grant to Grantee pursuant to the provisions of the Plan options to purchase
[_______] shares of Company common stock, $0.05 par value per share (the "Common
Stock"), as of the Effective Date.
AGREEMENT
NOW, THEREFORE, to evidence the grant of options by the Company and to
set forth the terms and conditions of the grant of options, the Company and
Grantee hereby agree as follows:
1. Grant of Options. The Company hereby grants to Grantee, effective as
of the Effective Date, non-qualified stock options to purchase up to ________
shares of Common Stock on the terms and subject to the conditions set forth
herein (the "Options. Terms not defined herein shall have such meaning as set
forth in the Plan.
2. Exercisability and Exercise Price. The Options will become
exercisable as follows:
(a) The exercise price under the Options shall be equal to [$______]
per share of Common Stock.
(b) Notwithstanding the foregoing, the Options will fully vest and
become immediately exercisable upon a Termination Event, as defined below.
3. Termination of Options.
(a) Unless an earlier termination date occurs as specified in this
Section 3, the Options will expire and become unexercisable (whether or not then
exercisable) on the tenth (10th) anniversary of the Effective Date (the
"Expiration Date").
(b) In the event that Grantee ceases to be a director of the Company
for any reason ("Termination"), all vested Stock Options shall thereafter be
exercisable until the earlier to occur of three years from the date of
Termination or the Expiration Date.
4. Restrictions on Exercise. Notwithstanding anything to the contrary
in this Agreement, the Options may not be exercised, and no shares of Common
Stock issuable upon exercise (the "Exercise Shares") shall be issued: (a) unless
all requisite approvals and consents of any governmental authority of any kind
having jurisdiction over the exercise of options shall have been secured and (b)
unless all applicable federal, state and local tax withholding requirements
shall have been satisfied. The Company shall use commercially reasonable efforts
to obtain the consents and approvals referred to in this Section 4(a) so as to
permit the Options to be exercised.
5. Non-Transferability of Options. The Options, any interest therein,
and the right to receive the proceeds thereof shall not be transferable by
Grantee, other than (a) by will or the laws of descent and distribution or (b)
upon dissolution of marriage pursuant to a qualified domestic relations order
or, in the discretion of the Committee and under circumstances that would not
adversely affect the interests of the Company, transfers for estate planning
purposes or pursuant to a nominal transfer that does not result in a change in
beneficial ownership. The transfer by Grantee to a trust created by the Grantee
for the benefit of the Grantee or the Grantee's family which is revocable at any
and all times during the Grantee's lifetime by the Grantee and as to which the
Grantee is the sole trustee during his lifetime will not be deemed to be a
transfer for purposes of this Agreement. A beneficiary may be designated with
respect to the Options in the event of the death of Grantee. If the estate of
Grantee is the beneficiary with respect to the Options, any rights with respect
to such Options may be transferred to the person or persons or entity (including
a trust) entitled thereto under the will of such Grantee or pursuant to the laws
of descent and distribution; provided that the deceased Grantee's beneficiary or
the representative of his estate acknowledge and agree in writing, in a form
reasonably acceptable to the Committee to be bound by this Agreement as if such
beneficiary or the estate were Grantee.
6. Withholding. Whenever shares of Common Stock are to be issued
pursuant to the exercise of Options, the Committee may require the recipient of
the shares of Common Stock to remit to the Company an amount sufficient to
satisfy any applicable federal, state and local tax withholding requirements.
Upon request by Grantee, the Company may also withhold shares of Common Stock to
satisfy applicable withholding requirements, subject to any rules adopted by the
Committee regarding compliance with applicable law, including, but not limited
to, Section 16(b) of the Exchange Act.
7. Manner of Exercise.
(a) To the extent that the Options have become and remain
exercisable as provided in Sections 2 and 3, and subject to such reasonable
administrative regulations as the Committee may adopt, the Options may be
exercised, by written notice to the Committee, specifying the number of Exercise
Shares and the date on which the Grantee intends to exercise the Options (the
"Exercise Date"). On or before the Exercise Date, Grantee shall deliver to the
Company full payment for the Options being exercised in cash, or cash equivalent
satisfactory to the Committee, and in an amount equal to the aggregate purchase
price for the Exercise Shares.
(b) Subject to the discretion of the Committee, the aggregate
purchase price for the Exercise Shares may be either (i) paid by capital stock
of the Company delivered in transfer to the Company by or on behalf of Grantee
and duly endorsed in blank or accompanied by stock powers duly endorsed in
blank, with signatures guaranteed in accordance with the Exchange Act if
required by the Committee, or (ii) retained by the Company from the stock
otherwise issuable upon exercise of the Options and being exercised (in either
case valued at Fair Market Value as of the Exercise Date, and subject to such
rules and regulations as may be adopted by the Committee to provide for the
compliance of such payment procedure with applicable law, including Section
16(b) of the Exchange Act).
(c) The Committee may require Grantee to furnish or execute such
other documents as the Committee reasonably deems necessary: (i) to evidence
such exercise and (ii) to comply with or satisfy the requirements of the
Securities Act of 1933, as amended, applicable state securities laws or any
other law.
8. No Rights as Stockholder. Grantee will have no voting or other
rights as a stockholder of the Company with respect to any shares of Common
Stock covered by the Options until the exercise of such Options and the issuance
of a certificate or certificates to him for such shares of Common Stock. No
adjustment will be made for dividends or other rights for which the record date
is prior to the issuance of such certificate or certificates.
9. Capital Adjustments.
(a) Subject to Section 9(b) below, (i) if the outstanding shares of
Common Stock of the Company are increased, decreased or exchanged for a
different number or kind of shares or other securities of the Company, or if
additional shares or new or different shares or other securities of the Company
are distributed in respect of such shares of Common Stock (or any stock or
securities received with respect to such Common Stock), through reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split, spin-off or other distribution with respect to such shares of Common
Stock (or any stock or securities received with respect to such Common Stock),
or (ii) if the value of the outstanding shares of Common Stock of the Company is
reduced by reason of an extraordinary cash dividend, an appropriate and
proportionate adjustment may be made in (x) the number and kind of shares
subject to the Options, and (y) the exercise price for each share of Common
Stock subject to the Options.
(b) Upon the dissolution or liquidation of the Company or upon a
reorganization, merger or consolidation of the Company with one or more
corporations, as a result of which the Company goes out of existence or becomes
a subsidiary of another corporation, or upon a sale of substantially all of the
property of the Company to another corporation (in each of such cases a
"Termination Event"), any Options not exercised on or prior to the Termination
Event shall expire and terminate, unless provisions be made in writing in
connection with such Termination Event for the assumption of the Options or the
substitution for such Options of new options covering the stock of a successor
corporation, or a parent or subsidiary thereof or of the Company, with
appropriate adjustments as to number and kind of shares and prices, in which
event such Options shall continue in the manner and under the terms so provided.
10. General Provisions. This Agreement shall be governed by and subject
to the terms and conditions of the Plan, and such terms and conditions are
incorporated herein by reference. Capitalized terms not defined in this
Agreement shall have the meaning set forth in the Plan. In the case of any
conflict between this Agreement and the Plan, the Plan shall control. Grantee
hereby acknowledges that he has received a copy of the Plan, has had a chance to
review it, and understands its terms and conditions.
IN WITNESS WHEREOF, the Company and Grantee have executed this
Agreement as of the date first above written.
ENVIRONMENTAL TECTONICS CORPORATION
By:
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Name:
Title:
GRANTEE:
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[NAME]